Massachusetts and New York are examining MetLife pension payment failure

Millions of Social Security recipients and other retirees will get a 2 percent increase in benefits next year. It's the largest increase since 2012, but comes to only $25 a month for the average beneficiary. (Oct. 13)
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File photo taken in 2016 shows MetLife Tower, right, near the Empire State Building, left, in New York City.(Photo11: Mark Lennihan, AP)

Massachusetts and New York regulators are investigating MetLife's failure to pay pensions to thousands of retirees.

The investigations began Monday, two days after the New York-based insurer disclosed that it is trying to locate a subset of approximately 600,000 retirees who are owed average annuity benefits of less than $150 a month.

Those affected, fewer than 30,000 retirees by MetLife's current estimates, are people who "have moved jobs, relocated or otherwise could not be located," MetLife CFO John Hele said during a Friday conference call with financial analysts.

MetLife officials said they would provide an update when the company reports its fourth-quarter earnings early next year. The company said it is strengthening its reserves and cautioned that the payment failure "may be material to our results of operations."

Massachusetts Secretary of State William Galvin said he wrote to MetLife seeking more detailed information about the problem, including a list of the retirees affected and the insurer's plans to repay them.

"Retirees cannot afford to have glitches with their pension checks," Galvin said in a statement announcing his investigation.

Similarly, Maria Vullo, superintendent of the New York Department of Financial Services, said her agency is conducting a separate review to ensure that the retirees receive all the payments they're owed.

What used to be standard protocol for finding retirees who are owed benefits is no longer sufficient. While it is still difficult to track everyone down, we have not been as aggressive as we could have been.

MetLife said the company is "fully cooperating with regulators."

"When we realized this was a significant issue, we launched an effort to do three things: figure out what happened, strengthen our processes so that we do a better job locating retirees, and promptly pay anyone we find – as we always do," the company said in a formal statement. "We are deeply disappointed that we fell short of our own high standards. Our customers deserve better."

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MetLife is among the insurance companies that U.S. corporate pension plans use for transferring their pension liabilities to group annuity contracts.

In 2012, MetLife agreed to a $40 million multistate settlement over the insurer's handling of death benefits. The agreement was expected to pay as much as $437 million to heirs of deceased life-insurance policyholders.

In that case, state investigators determined that MetLife checked the Social Security Death Master File to determine if any of the company's annuity payment recipients had died. Payments were stopped for those listed in the file.

However, state investigators also determined that MetLife had not notified heirs that the individuals also had life insurance policies issued by the company. The settlement required MetLife to conduct monthly checks of death databases to determine whether life insurance payments are due to relatives of deceased policyholders.